Since President Recep Tayyip Erdogan left global investors in “shock and disbelief” during a visit to London in mid-May, Turkey’s Central Bank has twice raised interest rates to salvage the plummeting Turkish lira, ending months of inaction amid Erdogan’s stiff opposition to rate hikes. The two sharp hikes — on May 23 and June 7 — reflect Erdogan’s grudging acquiescence to the rules of the game, but beyond that, of Turkey’s growing reliance on global money that leaves little room for waywardness for political actors at home.
In media interviews and meetings with institutional investors in London, Erdogan had argued he would fight inflation with lower interest rates, a theory that defies economic orthodoxy, while expressing his intent for a more centralized economic management and greater intervention in Central Bank decisions if he wins the June 24 elections.
